A country's culture and reporting of sustainability practices in energy industries: does a corporate sustainability committee matter?

This study investigates the impact of the national culture on the reporting of sustainability practices. Likewise, it explores the moderating effect of sustainability committees within firms on the nexus between a country's cultural and sustainability reporting. The study uses a sample over a decade (2010–2019) from 18 countries. It employs six well-established cultural dimensions: power distance, Individualism, Masculinity, uncertainty avoidance, long-term orientation, and Indulgence. These dimensions are aggregated to create a composite cultural index score for each country, reflecting the nuanced interplay of cultural attributes. The sustainability reporting score is based on a firm Environment, Social, and Governance (ESG) scores. The results reveal that reporting sustainability practices is a positive function of our country's cultural index score. This indicates that a firm dissimilates higher levels of sustainability information when it operates in a country with a higher power distance, lower Individualism, higher Masculinity, higher uncertainty avoidance, higher long-term orientation, and lower Indulgence and vice versa. Likewise, a sustainability committee moderates the relationship between the national culture and sustainability reporting, suggesting that a corporate sustainability committee can act as a mechanism for aligning and adapting sustainability reporting practices to the specific cultural context in which a firm operates. The results provide essential implications for firms and policymakers. Firms should be aware of how cultural values shape their sustainability reporting. Also, a specialized sustainability committee navigates cultural complexities and aligns initiatives with expectations. Moreover, Policymakers should consider cultural influences and develop guidelines that accommodate variations, leading to more effective sustainability reporting. This study contributes by examining environmentally sensitive industries (i.e., the energy industries), providing industry-specific analysis that deepens our understanding of how a country's culture shapes the reporting of sustainability practices. Likewise, the study uses a holistic approach, exploring the multifaceted dimensions of the country's culture and its consequences for reporting sustainability practices.

Ahmed Hassanein, Ahmed Bani-Mustafa, Khalil Nimer